Coffee Market Report September 11 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market increase their net short sold position within the market by 3.42% over the week of trade leading up to Tuesday 4th. September; to register a new net short sold position of 102,152 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 1.85%, to register a net long position of 43,650 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 3.4%, to register a net short sold position of 105,336 Lots.  This net short sold position which is the equivalent of 29,862,289 bags has most likely been little changed, following the period of mixed but overall sideways trade that has since followed and likewise, that of the managed money fund sector of the market. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market increase their net short sold position within this market by 6.55% during the week of trade leading up to Tuesday 4th. September; to register a net short sold position of 36,340 Lots on the day.  This net short sold position which is the equivalent of 6,056,667 bags has most likely been little changed, following the period of mixed but overall sideways trade, which has since followed. 

The Vietnam Customs Authority have reported that the countries coffee exports for the month of August were 13.55% higher than earlier forecast, at a total of 2,555,000 bags.   This they say has contributed to the countries cumulative coffee exports for the first eight months of this year to be 16.5% higher than the same period in the previous year, at a total of approximately 21.67 million bags.  

However, despite the impressive 16.5% increase in volume of coffee exports over the past eight months, they have reported that the revenue from these exports was 1.5% lower than the revenue over the same period last year, at a total of approximately 2.5 billion U.S. dollars.   This decline in revenue that is related to the soft nature of the reference prices of the international coffee prices of late, well illustrating the pain that many if not most, coffee producers are suffering this year.  

The November 2018 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.25 usc/Lb., while this equates to 33.83% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 13,636 bags yesterday; to register these stocks at 2,263,789 bags.  There were meanwhile a smaller in number 12,932 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 190,088 bags. 

Many of the commodity markets encountered a modestly softer U.S. dollar yesterday and with many markets showing a degree of buoyancy, to see the overall macro commodity index taking a positive track for the day.    The Brent Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Wheat, Corn, Soybean and Silver markets ended the day on a positive note and the Gold market was steady for the day, while the U.S. Oil, Coffee and Orange Juice markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.61% higher; to see this index registered at 403.74.  The day starts with the U.S. Dollar near to steady and trading at 1.304 to Sterling, at 1.160 to the Euro and with the dollar buying 4.086 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 76.80 per barrel. 

The London market started the day yesterday trading marginally south of par and the New York market started the day with modest buoyancy and with the London market moving deeper into negative territory and the New York market maintaining its buoyancy, into the early afternoon trade.  As the afternoon progressed the London market remained mostly on the backfoot and the and the New York market maintaining some muscle, but with the New York market finally coming off the boil and slipping south to join the London market in negative territory. 

The London market ended the day on a negative note and with 77.8% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 88.9% of the earlier losses of the day intact.  This negative close and despite some support from the softer dollar and with the close painting a dismal picture for the charts, does little to inspire any confidence.  However one might still think that there might with the extensive short positions in hand be some degree of speculative exhaustion, to assist towards a near to steady start for early trade today, against the prices set yesterday, as follows: 

LONDON ROBUSTA US$/MT                       NEW YORK ARABICA USc/Lb. 

SEP    1537 + 1                                               SEP      97.50 – 1.30

NOV   1477 – 14                                             DEC    101.25 – 1.20

JAN    1481 – 13                                             MAR   104.65 – 1.15

MAR   1497 – 11                                             MAY   107.10 – 1.10

MAY   1515 – 11                                              JUL    109.50 – 1.05

JUL    1532 – 11                                              SEP    111.85 – 1.10

SEP    1549 – 11                                              DEC   115.30 – 1.10

NOV   1562 – 12                                              MAR   118.60 – 1.05

JAN    1573 – 13                                              MAY   120.60 – 1.00

MAR   1590 – 13                                              JUL    122.35 – 0.95